On receipt of the written warning, the company last year initiated exhaustive technical investigations with a view to assuring the proper implementation of vehicle safety measures and to revising recall procedures. On the basis of the findings of these investigations, the company submitted a report to MLIT on December 22, 2004. The final report submitted today adds new improvement measures to those contained in the initial report. These measures have been developed on the basis of the findings of an investigation beginning last July by a team of external lawyers into the facts behind the past recall problem and into its root causes. Further, to prevent the recurrence of such improprieties, the company is actively implementing major reforms in the corporate culture. Now, on the basis of the facts as identified by the investigation into the recall problems, the company has decided to take disciplinary measures or other action against those involved.

I . Findings of investigation into past recall problems

The company commissioned a team of external lawyers and mobilized a number of internal departments coordinated by the CSR Promotion Office to conduct investigations into the facts lying behind, and the root causes of, past recall problems. The findings of these investigations are summarized as follows.

1. Company response in 2000:
   The investigations have found that the company's investigation in 2000 into the former practice of Shiji Kaishu (repair directives) was insufficiently thorough. More specifically, the 2000 investigation failed to bring to light the illegal practice of Shiji Kaishu and in doing so failed to give due precedence both to the company's customers and to the fundamental principles of the law that requires an automobile manufacturer to provide adequate road transport safety. It must be said that there was a serious lack of awareness on matters relating to compliance.



2. Hub problem:
   The findings show that the technical views presented by the R&D Department of the Truck and Bus Division at the time led to a misreading by the company of the post-market action required to be taken. It is possible to see in these views a desire to explain the cause of the problem in such a way that would allow the company to avoid post-market measures.



3. Clutch housing:
   With regard to the matter of Mitsubishi Motors having shipped to market vehicles that did not meet the safety standards drawn up by the R&D Department of its Truck and Bus Division, the investigation found that the company failed to make public these facts although it subsequently had numerous opportunities to correct the situation. The investigation has shown that the cause of the clutch housing accidents lies in the fact that the Truck and Bus Division covered up the problem and failed to file a recall.



4. Accountability:
   As to the question of responsibility, the investigation considers that accountability lies not only with the employees of the departments involved and with the corporate officers to which those departments report but also with successive managements for their failure to build an organizational structure that was capable of detecting cover ups of defects requiring a recall. The investigation also determined that blame for the company's response in 2000, for the hub problem and for the clutch housing problem must attach to the R&D, the Production and the After-sales Service departments that were also involved as well as departments in charge of quality assurance.

II . Final report (additional improvement measures) to MLIT

In the light of the findings outlined above the company will implement a further set of improvement measures, the most significant of which are introduced below. These latest measures will be in addition to the reforms in work processes that are already being implemented to eradicate Shiji Kaishu and to speed up the recall process.

1. Incorporating product quality information into management system
   The status of post-market measures implemented or being implemented by reason of defects — this not being limited to defects requiring a recall and also including defects that are deemed not to require a recall — will be reported to Board of Director meetings and will be incorporated into the management system as a vital element of corporate business policy.



2. Raising Quality Assurance Office staffing levels
   The company will increase the Technical Center headcount and will also bring in extra personnel to boost technical support for sales companies. These manpower increases are in addition to the creation of the Quality Assurance Office in June last year.



3. Raising employee awareness on quality issues
   The company will implement employee conduct education and training programs and will also include an assignment to a quality related department in the career path.



4. Revisions to employees regulations
   With a view to raising awareness about the recall process and to preventing any recurrence of the present situation, the company will revise the disciplinary provisions in the Employees Regulations to clarify responsibilities of individual employees with regard to product quality and customer safety.



5. Business ethics action program to continue
   Seeking to further raise compliance awareness levels throughout the organization, in fiscal 2005 the company will be implementing a number of ongoing initiatives. These will include the holding of "Business Ethics Issues Study Groups" on a departmental basis that discuss and consider areas and matters requiring special attention from a corporate ethics perspective in the course of everyday work and duties.

III . Disciplinary action

The company set up an Extraordinary Recall Problem Council on February 14 this year. Comprising seven company members and three external lawyers, the Council convened a total of seven times. Mainly on the basis of the findings of the lawyers' investigation, the Council deliberated on the blame to be attached to successive managements responsible for building up the company's corporate culture and organization, and to individuals involved in formulating the company's response to the past recall problems that surfaced in 2000. Taking into account the date of introduction of legislation governing Japan's recall system and to statute of limitations considerations, the Council looked into disciplinary measures and other action to be taken for a period covering the past 10 years.

1. The Council examined a total of 157 directors, executive officers and auditors who have held posts since July 1995. To draw a clear line between right and wrong in terms of past recall problems and to fulfill the company's commitment to the revitalization of its business, the Council recommended that the company initiate proceedings to sue for damages against seven former directors and executive officers, these including former chairmen and presidents. The company will limit its claim for damages to the total net severance payments received (\1.3 billion for the seven people involved.)



2. The Council also recommended that the company demand the return of severance payments from 10 former senior management executives in the quality assurance, sales and R&D departments who, in view of the relative seniority of their posts at the time, were deemed not to deserve to be sued for damages. The amount of severance payment to be returned will depend on the relative degree of responsibility of the individual concerned.



3. The Council recommended that blame should be attached only to company officers and that at the present time no disciplinary action should be taken against rank and file employees. Reflecting the company's keen awareness that the implementation of improper post-market and recall measures should not be permitted in any circumstance, the new management team will, however, stiffly reprimand those involved.

Over the last year Mitsubishi Motors has faced a management crisis of unprecedented proportions. With the submission of the final report to the MLIT today, the company is confident it has brought to a close the recall issues that sparked off this crisis and that it has identified and dealt with the detrimental elements from its past.

Management will continue to devote all its energies and resources to the revitalization of the company. In this endeavor management attaches the highest priority to the proper implementation of recall processes and to the establishment of structures and systems that assure full regulatory and ethical compliance. Everyone at Mitsubishi Motors is totally focused on regaining and restoring customer and public trust and confidence in their company.